Buy a company in Vietnam Vs. Create a new one
When it comes to launching your offshore business in Vietnam, you must make a significant decision. Do you want to start a new business from scratch or buy an existing one?
Both have advantages and disadvantages. However, in our opinion, the advantages of an off-the-shelf company make this an option well worth pursuing. It is critical to have all of the facts before making your decision, as it has been reported that four out of every ten businesses fail within five years, making it even more important to set yourself up for success from the start.
First, let us define a shelf company or aged corporation.
What is a shelf company?
A shelf corporation, also known as a shelf company, or aged corporation is a company or corporation that has had no activity. It was created and left with no activity – metaphorically put on the “shelf” to “age”. The company can then be sold to a new owner who wishes to start a company without going through all the procedures of creating a new one.
Reasons for buying a shelf or aged company in Vietnam
Common reasons for buying a shelf corporation include:
To save the time involved in taking the steps to create a new corporation.
Establishing a foreign-owned company in Vietnam can be a time-consuming and difficult process. To complete a simple company registration, the incorporation process may take 4-6 weeks. It can take months or even a year for a conditional or restricted business that may require additional approval from a ministry or third party.
As a result, finding a ready-made company for sale would be a dream come true for many investors. If there is no significant change in registered business lines or capitals, the transfer of a company from one owner to the other takes about 45 days. Buying off-the-shelf corporate is clearly the better option when compared to starting a new one.
To gain the opportunity to bid on contracts.
Some jurisdictions require a company to be in business for a certain amount of time in order to have this capability. This is especially true in construction, architecture, engineering, consulting, or other business practices where the “experience” factor is used to win a bid.
The age of project contractors or subcontractors is almost always specified in projects owned by the Vietnamese government. An older company will always have a better reputation than a newly registered business and will thus be regarded as a more trustworthy partner.
To show corporate longevity in order to attract clients
For example, if a company has been in business for many years in its industry sector and another similar company has only been in business for 6 months, which one do you choose as your business partner?
Indeed, it is often a business policy that a company must have been in operation for a certain number of years.
When compared to newly established companies, shelf and aged companies appear to be older and thus more trustworthy.
Clients who put their trust in older businesses are more likely to be well-established themselves. This reduces the risk of doing business with them and creates a win-win situation. So, why exclude a portion of the market by refusing to buy an off-the-shelf company?
To gain access to corporate credit.
The age of the company conveys experience and credibility. It can provide evidence of previous operations and transactions. As a result, a company like that will always have a better reputation than a newly registered business, and banks will view it as a more reliable investment option if the owner decides to apply for a bank loan someday.
Furthermore, an older company can gain more trust in government officials when performing public services such as sponsoring work permits for ex-pat employees or applying for a visa for the company’s owner. There were times when the age of the company was a deciding factor in the visa’s success. Although not publicly acknowledged, this is now fairly common practice in Vietnam. Have you ever heard the phrase “your company is too young to do anything”? – we’re sure we’ve all heard it.
Market entry shortcut for foreign investors in Vietnam
With all of the benefits listed above, purchasing an off-the-shelf business or an older company is a highly advantageous approach for doing business in Vietnam. This approach to owning a business in Vietnam serves as a shortcut to the market for foreign investors, cutting the time required for incorporation in half. As a result, when compared to a newly established company, the natural value of an aged business is unrivaled.
What advice for foreigners buying off a shelf company in Vietnam
Every year, Vietnam has thousands of aged corporations for sale. It is not difficult to find one, but finding a good one may necessitate some expert advice. Before you begin, it is best to seek professional advice, especially if you are unfamiliar with the language or business culture. Below are some highlights:
- Find a trustworthy business seller
- Follow steps while buying off a shelf business in Vietnam
- Keep an eye on the timeline
- Must pay attention to what needed to be done after the transfer
- Keep an eye on operational matters
Buy off a shelf business with Vietnam Business Gateway
At Vietnam Business Gateway, we collect information from over 10,000 businesses for sale in Vietnam. As a result, we can assist you in locating a suitable shelf company that meets your requirements. VNBG acts as a liaison between the client and the shelf business owner in order to help negotiate and quickly close the deal.
We will then proceed with the documents to transfer ownership to our client once the deal is confirmed until the company is completely registered under the new owner. We offer advice and support all the way to the end.
To begin, please let us know about your interest in purchasing a business, and one of our consultants will contact you as soon as possible.